Key facts
- The White House is preparing a plan for a potential 90-day ban on diesel exports.
- US exports a significant amount of diesel, being the largest exporter globally.
- Banning diesel exports could force U.S. refiners to reduce overall oil product output.
- High diesel prices are impacting farmers' incomes, according to Senator Chuck Grassley.
- Global diesel markets are already strained due to damaged Middle East refineries and Ukrainian attacks on Russian refineries.
The White House is reportedly developing a plan for a potential 90-day ban on diesel exports to combat rising domestic prices that are pressuring farmers. The proposal comes as a response to calls from Republican lawmakers, including Senator Chuck Grassley, who highlighted the detrimental impact of high diesel costs on agricultural income.
Experts caution that such a ban could be counterproductive. "The blunt tool of banning diesel exports definitely doesn’t work because the U.S. exports a lot of diesel," said one analyst on a Climate Week panel. "We’re the largest diesel exporter in the world, but that same refinery that produces diesel also produces gasoline and jet fuel. So, if you can’t export the diesel that comes out of our refineries when you run out of places to store it, and you have to reduce U.S. refining, which would put upward pressure on gasoline prices and jet fuel prices."
David Oxley, chief climate and commodities economist at Capital Economics, noted that a U.S. ban would "exacerbate the existing severe strains in the global diesel market and drive prices outside of the US even higher in the short term." He added that a surplus of diesel in the U.S. could force refiners to cut supplies, making the ban ultimately self-defeating. The global diesel market is already facing pressure from damaged refineries in the Middle East and Ukrainian attacks on Russian refineries.